Equity trading commissions generated in Canada over the past year declined, and RBC’s dominance increased, according to new research from Greenwich Associates.
The firm reports that for the past 12 months, Canadian equity commissions (as tracked by its universe of 96 trading desks) declined by about 12% to $605 million from an estimated $690 million in the previous year.
RBC Capital Markets leads the industry in this category, the firm says, with a 15.7% share of both high-touch and low-touch commissions in Canadian equity trading. This share puts it well ahead of rivals, BMO Capital Markets and TD Securities, which were tied with trading shares of 11.0%–12.1%, Scotiabank at 10.2%, and CIBC at 9.1%.
“While there’s always back and forth among the Big Five Canadian banks that dominate this business, RBC’s position in 2014 is as strong as we have seen any bank achieve in this market,” says Greenwich Associates consultant, Jay Bennett. “RBC’s equity capabilities are the broadest and deepest of the Big Five at the moment. In addition to its strong domestic equity research franchise, the bank also has a strong electronic trading platform, which clearly differentiates it from the other top brokers.”
Greenwich reports that while high-touch trading still accounts for twice the trading value as low-touch trading, the percentage of Canadian equity trading executed via electronic trades increased significantly from 16% to 24% over the past year.
It also notes that ITG is the clear leader in Canadian equity algorithmic trading, which increased from 13% to 19% of trading volume last year, and Greenwich says may rise to 21% over the next several years. It says that ITG is used by approximately three-quarters of institutional investors, outdistancing RBC, which is used by roughly 60%.
Greenwich reports that RBC is also the market leader in all of its categories measuring quality in Canadian equity trading.